In Partnership with Pregis
Understanding the Impact
E-commerce retailers and manufacturers put in a significant amount of effort and investment making sure the products they produce meet quality and performance goals. However, if faulty packaging results in consumers receiving your product in damaged, broken and/or non-functioning condition, the impact to the bottom line can be significant. In fact, for larger retailers, the impact of damaged product to the bottom line can turn into millions of dollars. For a single return, hundreds of dollars in added costs can be easily incurred if every function and process was included in the calculation. Also, the loss of future orders based on a negative experience can add up to thousands of dollars per customer.
Why does this happen? When reviewing their protective packaging options, many companies tend to focus only on the cost of the packaging itself, missing the big picture. In addition to price, here are five key areas that each product manufacturer or fulfillment operation needs to understand when trying to minimize product damage and its resulting impact on profitability.
Inside the Impact of Packaging Damage
Online marketing, specifically paying per click, is expensive when you take into consideration that conversion rates to acquire new customers are typically below 4%. These investments are not fully realized when customer lifetime value is reduced. It’s important to broaden your thinking to include this marketing expenditure when a customer is lost.
Ecommerce companies and manufacturers also can’t overlook the impact of social media on brand image and sales. According to the influencer marketing website Curalate, 92% of people are more likely to be influenced by their own social network than traditional marketing and advertising. As we have all witnessed, when someone has a negative customer experience, they tend to put it on social media. This means that in addition to the original customer not wanting to buy from the retailer again, their friends are now also significantly less likely to purchase from that company again.